Happy belated 4th. My occasional reminder that the best gift you can give yourself and everyone around you is the awareness of index ETFs. 99% of investors cannot beat these incredible ETFs that provide exposure to the best companies in the strongest economy in the world, automatically rebalance to add winners / remove losers, can be held forever, and require you to pay little to no taxes. SPY: 13.8% compound return over 15 years. Up 11% YTD. Trades at 21x forward P/E vs 10 year mean of 20x. Average of 9% EPS growth over past 10 years. (If you want the SP500, buy VOO which has lower fees instead of SPY). QQQ (Nasdaq 100): 18.5% compound return over 15 years. Up 18% YTD. Trades at 24x forward P/E vs 10 year mean of 25x. Average of 13% EPS growth over past 10 years. SMH (Semi's): 24.8% compound return over 15 years. Up 71% YTD. Trades at 25x forward P/E vs 10 year mean of 20x. Average of 22% EPS growth over past 10 years. IGV (Software): 16.0% compound return over 15 years. Down -12% YTD. Trades at 20x forward P/E vs 10 year mean of 35x. Keep in mind this EPS also is a blend of consensus so excludes plenty of SBC depending on the company (just saying despite the SaaS-pocalypse, the group doesn't stand out as "cheap"). Average of 12% EPS growth over past 10 years. Think about that for a second. You can own QQQ which is America's best tech companies (and the world buys American tech) for 24x EPS or a 4.2% yield on NTM that goes to a 4.7% yield on Y+1 to a 5.3% yield on Y+2, ... And you regularly get to buy QQQ at 20x or a 5.0% yield that increases over time. To me, that's a shockingly good deal compared to a risk-free rate that pays you in devaluing USD and is taxed. It's kind of remarkable that vehicles that have provided better returns than 99% of the active management industry (and 100% of the industry on an after-tax basis) with pretty digestible downside volatility aren't at least 50% of everyone's portfolios. I guess there is no face to these vehicles out there promoting them non-stop and no fees to feed an eco-system of advisors / marketers / etc. Anyways, I just encourage people to actively think about VOO / QQQ. Have you outperformed it over 20 years on an after-tax basis? Have your fund managers? ...

@a16z put out a solid deck today on State of AI. Does a good job of just putting it all together - AI capabilities rapidly expanding, AI model revenue ramp unprecedented, semi spend underneath unprecedented and driving earnings growth of the entire stock market, and multiples reasonable due to cyclical concerns. To me, the "elephant in the room" question is simply will AI monetization accelerate over the next couple years from what likely will be ~200b run-rate at the end of this year. Very rough math, but we added ~170b of model revenue in 2026 against 1.4t of capex over the past 3 years and 780b in 2026. Expectations per chart below are for 1.1t of capex in 2027 which then flattens. Maybe that implies the model companies in aggregate need to add ~200b of ARR each year to justify that spend? Is that possible? Sure but also tough to assign probability bc there are a million unanswerable questions underneath (product development, pricing power, etc.). That's also the bear case for semis for a future date: even if model companies plus others can add ~200b / year of incremental revenue, that implies semi spend stagnates after 2027 -> second derivative turns negative and multiples stay low until the inevitable downturn. I personally think 2028 is probably a 20-30% growth year in capex so the whole trade is more likely to up than down from here at these valuations, but just pointing out the risk that the market is pricing in here (and that has to dissipate via continued ARR growth / hyperscaler capex growth commentary to see the trade run). [Btw, I also think it's so fascinating that leading investment firms are also publishing leading news / research. This free newsletter from A16Z smokes independent publications (WSJ, Gartner, etc.), and the sell-side (less conflicted in some ways and more informed)]

Should have added that OAI simply saved down that I have $FDS and will just use it when it needs to going forward....!

I'm really curious to know what percent of $GOOGL / $AMZN ad spend consists of brands buying sponsored listings for their own search terms - basically spending to defend their own screen turf from competitive ads. See below for searches for Speedo Goggles: GOOGL: The entire visible screen is sponsored ads which Speedo has to pay for. The next screen down has Speedo in a thin organic result followed by a Deals market ad where Speedo again has to pay for shelfspace. Using Gemini search for "Find me speedo goggles" only showed Speedo branded goggles. AMZN: Speedo has an organic link in the bottom left and right, and otherwise is surrounded by competitive listings. Interestingly Speedo not paying up here (maybe realized using branded term this close to checkout means consumer is buying Speedo regardless). Using Alexa AI search for "Find me speedo goggles" only showed Speedo branded goggles. I personally find GOOGL / AMZN search results to be over-monetized w/ ads that don't add value - and, in fact, make it more annoying for me to find what I want. AI search for products on AMZN works really well for me fwiw so I must already be seeing far fewer ads simply by this usage shift. I don't really know what happens to this "traffic defense" spend in an agentic world. Feels like it would be less necessary in a world where agents need to be trustworthy to win consumer preference. So hard to imagine I ask an agent for speedo goggles and it spends 80% of the answer discussing competitive brands like regular search results do today... Maybe consumers always want choice so there is room for other brands to pay to be mentioned within the AI results - while still not being dilutive to the consumer's experience? Or, maybe agents can find the best 2-3 products so less need for brands to advertise within search and just put those dollars towards improving product quality / Internet posts to drive agentic preference? Random thoughts...

I'm going to date myself here but I remember a time when I was teenager, and the software functionality in the PC-era was advancing at such a rapid clip that it was next to impossible to keep up. Windows would have tons of new features every year, browsers advanced, email clients advanced, photo-editing tools advanced, etc. I don't know why my physician parents bought a computer but I'm really glad they did. I made sure I knew about every single feature / option across the hardware (I'd open it up and upgrade RAM, sound cards, etc.), operating system and apps. That was a time when you could buy books to learn Lotus 123 or Photoshop or whatever. And the books were super useful but also stale by the time you finished reading them. The mobile / Internet cycle for some reason felt slower to me. The AI cycle feels similar although maybe faster. Back in the PC era, my ability to use the new thing came down to my having the time / budget to go upgrade my hardware / software. Every time I log into Claude / Chat, there is a bunch of new stuff I haven't tried yet, new offerings weekly, etc. And it's all immediately available for basically free. This is a worthless comment but that "real functionality advancing far faster than adoption" was a 1995-1997 feeling, not a 2000 feeling. And there will be a time when Office kills off Lotus 123, Windows NT kills off Novell NetWare, Access kills off Borland, Adobe kills off QuarkXPress, etc. But maybe that's a handful of years out?

$QQQ forward P/E has averaged ~25x for the past 10 years. It currently trades at ~20x the 2027 EPS estimate. Let's assume a big recession in semis. I cut the 2027 EPS estimates for NVDA, AVGO, AMD, MU, LRCX and AMAT by 50%. $QQQ is then trading at 24.5x the revised 2027 EPS. Obviously, that isn't going to happen but shows that the market is already effectively pricing in an outcome like that already. [Maybe that's too optimistic and market would trade at 20x EPS in that scenario which would present 20% downside from here if it were to unfold]. I'm not smart enough to have a view on 2028 yet but doesn't feel like capex is going to get cut materially unless Anthropic / Open.AI growth dramatically decelerate. Separately, AI in Excel is pretty solid. Just obvious to me AGI is already here.

Further review of $DXYZ filings reveals some interesting points. Punchline is disclosed NAV is $34.30 today (6% upside from current price), conservative NAV is ~$35.31 (9% upside but only assuming Anthropic is 1t), and a reasonable NAV target might be $43.86 (35% upside assuming Anthropic is 2t and OAI is 1.3t). And some call option value on the equity doing something silly in advance of the IPO. 1. DXYZ is paying neither a management nor an incentive fee to Magnitude for the Anthropic position. See table below. Not paying fees for anything other than SPCX really. 2. DXYZ did not sell any Anthropic in the quarter. The N-PORT filings confirm it continues to hold 386,088 shares. 3. The value of the Anthropic holding only increased from 134m on 3/30 to 236m on 6/30. The stake was acquired on 1/26 for 107m. Assuming the 107m was invested at ~350b valuation, DXYZ is carrying Anthropic at ~770b valuation at 6/30 which equates to 14.4% of the NAV. 4. The valuation methodology for Anthropic is buried in the SPV valuation table. The Fair Value of $278,448 is only cleanly calculated by summing Magnitude, Goanna, and OAI. The methodology blends volume weighted average transaction price, index price and recent transaction price. The avg for these three investments was $651.51 over the qtr w/ the highest input being $766.76. A long way of saying this is another sign that Anthropic is likely being marked at a meaningful discount to even the 965b post Series H on 5/28. Scenario 1 (realistic cut as of today): Assume Anthropic 1t, OpenAI 850b, SPCX current price results in $35.31 NAV with position sizes of 46% cash, 18% Anthropic, 12% OpenAI. Scenario 2: Anthropic 1.5t, OpenAI 1t: $39.23 NAV with 41% cash, 25% Anthropic, 12% OpenAI. Scenario 3: Anthropic 2.0t, OpenAI 1.3t: $43.86 NAV with 37% cash, 29% Anthropic, 14% OpenAI 5. DXYZ sold 17m shares in the qtr at an avg price of $41.82. This is where the interests of DXYZ and investors diverge. Investors want exposure to the home-run investments w/o dilution. Meanwhile DXYZ has a business to run and wants to raise assets when the equity is at a premium. 5. The board approved a share repurchase program in August that allows them to buy back stock when it trades below NAV. So they now have a mechanism to raise capital when the stock is above NAV (bad for short-term traders of the stock), and buy the stock back to NAV when it trades below (good for short-term / long-term traders).